Online Grocery Delivery Services Market

The global Online Grocery Delivery Services Market was valued at USD 315.2 Billion in 2022 and is projected to reach a value of USD 1670.3 Billion by 2030 at a CAGR (Compound Annual Growth Rate) of 26.9% between 2023 and 2030.

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An online grocer is either a supermarket or grocery store that accepts online orders or a standalone e-commerce service that sells groceries. Typically, delivery fees apply to this service. Online retailers are brick-and-mortar supermarkets that have developed internet channels to improve customer service. The changing purchasing preferences of consumers due to the pandemic outbreak and the unabated growth of the e-commerce industry are anticipated to drive market growth over the forecast period. The plethora of online payment options and assurances of contactless delivery of ordered groceries offered by online merchants are anticipated to contribute to market growth. Technological advances, continued urbanization, and a paradigm shift in consumers' purchasing preferences are driving the preference for online grocery shopping. Grocers' introduction of innovative business models, such as slotted or express delivery and on-demand or subscription delivery models, encourages consumers to purchase online groceries. The attractive discounts service portals offer, and the rise in disposable income significantly expand the market.

Diverse delivery options, such as immediate or same-day delivery and click & collect, remain a niche for market expansion. In the United States, grocery stores offer contactless and expedited next-day or same-day deliveries. This encourages small-scale grocery stores to partner with third-party service providers like Instacart and enter the market. Food-delivery platforms like Uber Eats and DoorDash are also entering the market, recognizing their lucrative potential. The outbreak of the pandemic drives the preference for online grocery buying in particular. As a result, the easy availability of time slots, lower service fees, and the convenience of picking up the groceries on the way encourage individuals to click & collect services, book groceries online, and pick them up at their convenience while avoiding crowds. As a result, grocers are rapidly developing click-and-collect capabilities to provide a convenient and comprehensive customer experience across their entire network of grocery stores. Compared to conventional channels, the online channel provides consumers with more options. Therefore, e-commerce portals enable consumers to compare various products and make informed purchasing decisions. This also creates opportunities for grocers to develop brand recognition while focusing on quality. Additionally, features such as saved preferences and order history for reordering encourage consumers to choose online grocery purchasing, thereby driving market expansion.

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Top Market Trends

1. Rising Demand for Functional Foods and Beverages: The global demand for functional foods and beverages is increasing rapidly due to health benefits such as an improved immune system, mental strength, heart rate, digestive health, hydration, and electrolyte replenishment, and improved intestinal flora and gut function. In addition, consumers are investing more in non-traditional fitness activities such as yoga and aerobics; consequently, they prefer functional foods and beverages as a healthful source of nutrition. This increasing demand and aspiration of consumers for functional foods is further driving its global demand. Due to the limited availability of these functional foods and beverages in brick-and-mortar stores, consumers purchase them online. In addition to marketing their products with effective labeling and product formulation, sellers of functional foods and beverages also utilize effective labeling and product formulation. These products are being displayed and offered by online grocers and grocery delivery service providers to expand their product offerings and acquire a larger share of the global online grocery market. Consequently, these factors will drive market expansion during the forecast period.
2. Increasing Demand Due to Work-from-Home Culture: The expansion of the industry can be attributed to the convenience of prompt delivery, improved product quality, and the absence of geographical boundaries. Due to the accessibility of door-to-door delivery, consumers are likelier to opt for online shopping over physical shopping. Companies that sell their products online today provide superior product quality, encouraging customers to purchase from a particular website repeatedly. The industry's growth is attributable to a greater emphasis on expanding e-commerce business and adopting appealing marketing strategies. Due to rising levels of competition and the availability of many stores in unorganized sectors, online retailers are increasingly implementing free shipping policies and providing substantial discounts. The expansion of the online grocery industry is being fueled by consumers' preference for hassle-free and on-time delivery.

Market Segmentation

The global Online Grocery Delivery Services market can be categorized into Product Type, End User, and Region. Based on Product Type, the market can be categorized into Breakfast & Dairy Products, Fresh Produce, Snacks & Beverages, Meat & Seafood, and Staples & Cooking Essentials. Additionally, based on the End User, the market can be split between Individuals and Other End Users. Likewise, based on Region, the market is segmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.

Based on Product Type

Stape and Cooking Essentials to Account for Largest Market Share Owing to the Pandemic’s Growth

The segment's market dominance was enabled by the repeated purchases of staples, such as flour, food grains, and culinary essentials, including oil, which are regarded as necessities, particularly in Asia-Pacific households. As a result of the pandemic's outbreak, consumers are anticipated to remain hesitant to venture out and purchase the groceries they need daily, prefer avoiding crowds, and adhere to social distancing norms. From 2022 to 2030, the breakfast & dairy segment is anticipated to have the highest growth rate. The segment's growth can be attributed to the increasing demand for milk and non-milk products and the vendors' efforts to deliver these items to consumers' doorsteps. In the wake of the pandemic outbreak, a combination of a hectic lifestyle and rising disposable income is prompting customers to purchase these products from online platforms rather than visiting a physical store.

Based on the End User

Individuals to Accommodate Largest Market Share Due to Rising Number of Dual-Income Households

Due to the rise in working women, the number of dual-income households and the purchasing power and chaotic lifestyle have increased. Consequently, millennials seek shopping services that deliver the desired products to their homes. Other factors driving the demand for Online Grocery Delivery Services among individuals include the availability of options to save preferences and subscribe for timely grocery delivery and substantial discounts and offers compared to traditional grocery stores.

Based on Region

Asia Pacific to Delivery Maximum Products owing to Expanding Product Line for Deliveries

In 2022, the Asia Pacific held the greatest market share. From 2022 to 2030, the regional market is anticipated to maintain its dominant position and grow at the highest CAGR. The regional market expansion can be ascribed to the efforts of nations such as India and China to promote e-commerce and digitalization. For instance, in June 2016, the Indian government announced that it would permit 100 percent FDI in food retail, including via e-commerce channels, so long as the products are produced, processed, and manufactured locally.

North America is home to several major companies, such as Walmart, Instacart, Amazon.com, Inc., Target, and Kroger Co. Particularly, e-commerce transactions in the United States are growing steadily. According to the Retail Indicator Division of the U.S. Department of Commerce, e-commerce sales will increase 14.2% annually to $870 billion in 2022. However, the resurgence of in-store or offline shopping due to the easing of restrictions could threaten the development of online sales.

Competitive Landscape

The online grocery market is fragmented and is characterized by intense competition among the leading market participants. Alibaba.com, Amazon.com, Inc., JD.com, Inc., Rakuten, Instacart, and Walmart are some of the market's leading competitors. These businesses pursue various inorganic growth strategies to remain competitive and meet consumers' evolving requirements. Smaller entities are collaborating in particular.

The key players in the global Online Grocery Delivery Services market include - Tesco PLC (UK), Supermarket Grocery Supplies Pvt. Ltd. (BigBasket) (India), AEON Co. Ltd. (Japan), Amazon.com Inc. (U.S.), Blink Commerce Private Ltd. (India), Alibaba.com (China), Natures Basket Ltd. (India), JD.com Inc. (China), Instacart (U.S.), Reliance Retail (Reliance Fresh) (India), Rakuten Group Inc. (Japan), Walmart Inc. (U.S.), Target Brands Inc. (U.S.), The Kroger Co. (U.S.) among others.

Recent Market Developments

• October 2020: Walmart and Instacart announced a partnership for same-day grocery delivery. The partnership enables Walmart to compete with Amazon more effectively as grocery e-commerce surges in COVID-19. This partnership offers Walmart consumers in Los Angeles, San Francisco, San Diego, and Tulsa, Olka, access to Walmart's grocery delivery services when ordering via Instacart.
• October 2020: In India, Zomato, an online food purchasing and delivery service based in India, has launched Online Grocery Delivery Services. The strategic move will expand the Online Grocery Delivery Services market in India and Asia-Pacific.
• October 2020: Reliance Industries Ltd, a major Indian corporation, launched an online grocery store called JioMart. The initiative aims to capture a substantial proportion of the Indian Online Grocery Delivery Services market.

Segmentation of the Global Online Grocery Delivery Services Market